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Financial Statement Analysis: Advantages and Disadvantages

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Discuss the advantage and disadvantages of financial statement analysis. How can it help a manager make decisions and how might it mislead you? (Response should be a minimum of 400 words) • Use APA format for any quotations or citations you use to support your answer

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Step 1
Advantages of financial statement analysis are that it helps use financial statements for future planning and decision making. The financial statements show the budget of the company. Another advantage is that a financial statement reveals how much the company earns per year in sales. These may fluctuate but the analyst is able to identify a pattern. Another advantage is that the internal strengths and weaknesses of the business are revealed by comparing the balance sheet with the income statement. The financial statements summarize the accounting process and give an insight into the business. An important advantage of the financial statement analysis is that it gives enables the investor to make a knowledgeable decision about investing (Lasher. W, 2013). Financial analysis also reveals if the company ...

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This solution explains the pros & cons of financial statement analysis. The sources used are also included in the solution.

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What information do financial statements provide? What are the advantages and disadvantages of the different forms of business?

Topic A
Look at the four basic financial statements for any publicly traded corporation. You can find them at the SEC website using their search tool here: http://sec.gov/edgar/searchedgar/companysearch.html. Find the total assets, liabilities, and shareholders' equity for the most recent year (in the annual report). Study the income statement for the most recent year. What information do these statements provide? Make a list of 10 questions you have about the financial statements.

Topic B

You are a consultant who advises potential new business owners. An acquaintance is planning to start a small business that he wants to run as a sole proprietor. But he explains that he does not understand other business forms that he may adopt, and two of his friends may want to join the business in management roles. The business will be a landscaping firm that is expected to grow rapidly and require large investments in equipment in two to three years. Create a PowerPoint presentation for the potential new business owner that compares and contrasts the three main business forms and addresses advantages and disadvantages of each form. Include examples of types of businesses that would best fit each form. Present your recommendation for best business type for the new business owner.

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